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ExxonMobil Fails to Raise Its Dividend for the First Time in 38 Years

ExxonMobil (NYSE: XOM) just booted itself out of the Dividend Aristocrats after keeping its dividend at $0.87 per share, the first time since 1982 it failed to increase the payout.

The decline in consumer demand for oil because of the coronavirus pandemic has rocked the energy markets as large swaths of the economy were shut down and travel and tourism plans were shelved.

Image source: Getty Images.

Although most of the country has largely reopened, oil prices remain depressed. West Texas Intermediate goes for around $35 a barrel today, almost double the $19 it hit during the depths of the pandemic, but still below the $43 at the end of August and well below the $54 a barrel where it traded a year ago.

Analysts were concerned Exxon would actually cut its dividend to conserve cash because the oil giant faces a $46.5 billion debt load. A portion of that, however, was meant to ensure it had sufficient liquidity during the pandemic, since CEO Darren Woods believed it was "appropriate to provide liquidity, given market uncertainties." Even so, Exxon reported a loss of over $1 billion in the second quarter, or $0.26 per share.

The company is expected to begin cutting costs and jobs as soon as tomorrow, and analysts think the decision to maintain the dividend at its current level suggests it will see margin improvements due to the initiatives. That should let it maintain the payout at a rate that currently yields over 11% annually.

Royal Dutch Shell (NYSE: RDS.A)(NYSE: RDS.B) just announced earnings that beat expectations and surprised the market by raising its dividend 4%.

ExxonMobil notes it has paid a dividend for more than 100 years.

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Rich Duprey owns shares of ExxonMobil. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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